Slovenia Austerity Program Comes to Force

Slovenia’s government will continue with its austerity measures to cut the budget deficit after a trade union said it will challenge some of the moves at the Constitutional Court.

Lawmakers in Ljubljana on May 11 adopted a revised budget and other savings measures that foresee public-sector wage cuts and reduced benefit payments as the euro-region nation seeks to implement the so-called fiscal compact inspired by Germany.

The union representing soldiers and other employees at the Defense Ministry will ask the Constitutional Court to decide on the matter “due to unjust and unconstitutional provisions in the austerity legislation,” the group said yesterday in an e-mailed statement.

“This is just a first step,” the Finance Ministry in Ljubljana said today in an e-mailed response to Bloomberg questions. “Now we will focus on pension and labor market changes, on easing the burden for the economy via the creation of a wealth fund, as well as healing of the banking industry.”

Slovenia, whose public debt more than doubled since the 2007 introduction of the euro, pledged to cut spending by about 800 million euros ($994 million) this year to win investors’ confidence over the sustainability of its debt load as the crisis in Europe intensifies on concern that Spain may be the next country to ask for a bailout.

The economy grew 0.2 percent in the first quarter from the previous three months, exiting a recession as demand outweighed a drop in investments, the statistics office said today.

Two police unions yesterday dropped their demand to organize a referendum on the austerity package after reaching an agreement with the government. A referendum would have delayed the implementation of the measures, according to Finance Minister Janez Sustersic.

In an interview with the weekly Demokracija, Sustersic said the euro region country would “be pushed to the verge of bankruptcy” if the call for a referendum went through.

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